Gemfields Group (GML) H1 2024 earnings summary

Executive summary

• Revenue for H1 2024 was $128 million, down 17% year-over-year, mainly due to softer auction results and lower premium ruby production, but premium pricing for high-quality gemstones remained robust.

• Significant investments are underway, especially at MRM, with a $70 million second processing plant on track for completion by H1 2025, expected to triple throughput.

• The company emphasized careful cash management and capital allocation during this period of heavy investment.

• The luxury goods market has softened, impacting auction outcomes, but management remains optimistic about upcoming higher-quality auctions.

• The company remains focused on safety, ESG, and responsible sourcing, with no lost time injuries reported in 2024.

Financial highlights

• H1 2024 revenue: $128 million, down from $153.6 million in H1 2023.

• EBITDA for H1 2024: $49.6 million, margin 38.8%, down from $73.0 million and 48% in H1 2023.

• Net profit after tax: $13.7 million, down from $18.1 million in H1 2023.

• Free cash flow before working capital: $3.3 million, down from $25.2 million in H1 2023, reflecting heavy CapEx.

• Net debt stood at $44.4 million as of June 30, 2024, with auction receivables of $65.5 million; net cash position of $21.1 million including receivables.

Outlook and guidance

• Management expects higher revenues after the completion of the MRM processing plant in H2 2025.

• No material price drops are expected for premium gemstones in upcoming auctions, though some price declines are anticipated for lower quality stones.

• CapEx for H2 2024 is projected at $20–30 million for PP2, with Kagem and development projects expected to remain flat or lower.

• Net debt is expected to approach or exceed $100 million during the next year as investments continue.

• Management is prepared to implement cost-saving measures or seek additional financing if market conditions deteriorate.